An Asia-Pacific Prognosis to 2020


Index

Background Paper 13 1997-98

Professor Emeritus Jamie Mackie
Consultant to Foreign Affairs, Defence and Trade Group
9 March 1998

Contents

Major Issues Summary


Implications for Australia

Introduction

Overview: Opportunities and Challenges
A Bird's-Eye-View of 2020
Table 1. Population and Various GDP Projections, 1995-2020

The Asia-Pacific International System

ASEAN, ARF, APEC & EAEC
Japan
China

Australia's Southeast Asian neighbours

Indonesia
Singapore
Malaysia
Thailand
The Philippines
Vietnam, Cambodia, Laos and Burma
The Overseas Chinese and Regional Integration

Will High Growth Rates be Maintained?

Democratising Versus Authoritarian Tendencies

Implications for Australia

Conclusion

A Postscript, January 1998

Appendix A: The Last 23 Years - Unpredictable Changes

Appendix B: Natural Disaster Scenarios

References

Major Issues Summary

In 2020, the East and Southeast Asia region, with several countries that are much wealthier and more powerful than today with larger markets, will present great export opportunities for Australian businesses, but also major challenges of economic and cultural adjustment for the whole country. Our previous 'comparative advantage' in national strengths of various kinds, so widely taken for granted in the past, will have diminished greatly by then and could be increasingly hard to sustain.

Whereas we used to think of the region (apart from Japan) as made up of very similar agricultural countries with poor, fast-rising populations, the economic, social and demographic differences between them are now widening rapidly (Table 1). All countries in the region will soon have low rates of population increase, close to Zero Population Growth (ZPG) levels, utterly unlike the situation there a generation ago.

In 2020, GDP per capita in Taiwan and South Korea will probably be close to $30 000 (at 1995 dollar values-and higher if measured on a purchasing-power parity basis/PPP), not far below the Australian level, while in Japan and Singapore it will be well ahead of ours. Income levels in Malaysia and Thailand will be catching up with those in Australia but still some distance behind, while in the Philippines, Indonesia, Vietnam and China, each with large agricultural populations, even a trebling of per capita income levels will not have raised them, by then, to the level of Malaysia in the early 1990s.

The 1997-8 financial crisis across the region will cause a serious setback for several years, at least, although the effects will be less serious and long-enduring in some countries than others. The long-term impact on per capita income levels by 2020, as set out in Table 1, is therefore impossible to foretell with confidence, although it will probably be within or near the parameters set out there.

In Indonesia, the country whose future development is of most direct concern to Australia, the damage done by the economic crisis of 1997-8 is likely to delay an early return to the high growth rates of the previous decade. If the transition from President Soeharto to the country's third president cannot be achieved smoothly, there is a danger of serious political and economic turmoil, with unpredictable consequences. In 2020, even on the most optimistic scenario, Indonesia will still be a very poor country, no matter how much wealthier she is than now.

Of the other ASEAN countries, there is every likelihood by 2020 that Singapore will have become a major economic powerhouse of hi-tech economic activities, with a highly productive, well-educated work-force. Not much political change towards either greater democracy or more authoritarian social control is to be expected there. Malaysia too is unlikely to undergo much political change, but could be expected to more than treble its per capita income levels by 2020. Thailand will almost certainly grow more slowly than over the last decade, and much will depend on how effectively its government can resolve the current financial crisis. Only minor political changes are likely in the direction of either authoritarianism or more democratic politics, unless a major economic collapse occurs. The Philippines may succeed in holding a 5-6 per cent per annum GDP growth rate, but from a very low base, while improvements in the political system are still problematic; so a relapse into stagnation is a possible danger. To depict the Philippines as a potential 'Fifth Tiger' is absurdly unrealistic. Little political change is to be expected in Vietnam, Laos, Cambodia or Myanmar, while income levels there will still be very low until long after 2020.

In Northeast Asia, where unpredictable factors are more likely to yield greater upsets, Japan is likely to have little political change and very low GDP growth rates for several decades. In China, the risks of political instability are great, but can probably be contained so long as the economy continues to grow steadily, even if at lower rates. This paper puts the odds in favour of continuity and stability in China distinctly higher than serious turmoil and economic collapse. The future of South Korea and Taiwan will depend very largely on the outcome of the unique problems confronting each; reunification with the North in the former case, resolution of the conflict with China in the latter.

International conflicts between the ASEAN states are far less likely to occur in the next quarter-century than in the last, now that Vietnam has joined ASEAN. But minor political rifts among them could arise over questions of how relations with China, Japan and the USA should be handled. The enlarged ASEAN may find it harder to reach consensus on these issues than did the original ASEAN grouping.

ASEAN may suffer some loss of cohesion from its increase from five to ten members, although it will remain useful to them as a symbol of regional identity and of their shared desire for consensus on international issues. ARF (the ASEAN Regional Forum) will probably become an increasingly important body for wider deliberations on political and security issues, although not on a highly institutionalised basis. APEC may over time prove to be a less important body for trade negotiations than it has seemed to Australia since 1990. The East Asia Economic Caucus (EAEC) could become a much more significant organisation on some economic and political issues than we have yet regarded it.

The most formidable problems for Australia are likely to arise in the wider East Asian international system, within the China-Japan-US triangle, especially if China becomes determined to drive a wedge diplomatically between the latter two. Any disruption of the current uneasy equilibrium in the triangular balance between the three great powers will impose serious strains on the ASEAN Ten which will find themselves under great pressure to take sides. Australia is likely to be in much the same boat.

The high growth rates of most countries of the region will gradually slow as they become more industrialised and complex, but are likely to remain in the 5-6 per cent range, at least, in most cases, including China. The three major factors fuelling the boom conditions of the last decade can be expected to continue: i.e. on the supply side:

  • rising productivity per worker and national efficiency in most parts of the region;
  • the demand pull of export markets, increasingly within the region itself; and
  • rapid urbanisation.

However, high infrastructure costs and environmental problems will impose heavier burdens on all these economies, except Singapore.

Progress towards more democratic, participatory or accountable modes of government is likely to be very limited and at best incremental in all countries of the region. The growth of large and wealthy middle classes may generate demands for legal and civil rights or greater press freedoms, but any trends in that direction are likely to be resisted by governments on the basis of an increasingly strident invocation of 'Asian values' and national identity as a means of social control.

The wealth of the Overseas Chinese throughout Southeast Asia is almost certain to go on increasing rapidly, but their political power will remain tightly circumscribed, except in Singapore and Thailand. Their participation in any China-based plans to create a 'Greater China' which embraces the wealthy Overseas Chinese as well as the southern China-Taiwan region is highly unlikely. Rapid growth in southern China may result in some degree of cultural 'resinification' of the Southeast Asian Chinese minorities over the next generation, in contrast to the last thirty years of steady 'desinification' and dissociation from China. But to read portentous political or economic implications into that is fanciful.

The possibility of huge natural disasters (earthquakes, volcanic eruptions etc.), major environmental problems, epidemics or global economic upheavals has not been included in any of the above forecasts. But they cannot be left out of consideration entirely, environmental disasters especially.

Implications for Australia

By 2020 it will have become much harder than it has been in the past for Australia to exploit the advantages we have previously enjoyed in the form of advanced industrial skills and military technologies, high educational standards and long-established links with Europe or America. Neighbouring countries will have done a lot of catching up by then, even surpassing us in some fields. In order to maximise such comparative advantage as we will still have in those spheres, we will need to combine a judicious combination of reliance on market forces with forward-looking political and commercial strategies based on an intelligent, in-depth grasp of the complex, multi-layered changes taking place throughout our region.

Provided Australia is able to participate in the international deliberations taking place in our region on political and security matters, we should be able to take advantage of our 'soft' assets in the form of brain power, access to top-class information sources, good libraries, regional expertise and well-established higher education systems, high-quality legal, accounting, and engineering professions and so on. We should be able to maintain a comparative advantage in some niche markets, as Switzerland and Sweden have done in Europe and worldwide. Exclusion from those Asian deliberations would be one of the worst-case scenarios for Australia.

Central to Australia's prospects in all this will be the character of our responses to the changes occurring in the Asia-Pacific region between now and 2020, as well as the quality of our ideas about how best to find an appropriate place and national identity in relation to the future development of the region as a whole.

Introduction

'If catastrophe does not strike ... by 2020 Asia and the West-homes to the greatest of human civilisations-will be in a very different relationship from any they have had before. When China was strong and Europe weak, there was little contact between the two ... When the West grew strong, it subjugated Asia. In another generation, the two could well be closely entangled, but also treat each other on an equal footing. They have plenty to teach one another...' (Jim Rohwer, Asia Rising, 1996: 350)

That may be the way things will be in 2020, but it may not. Rohwer's forecast, made at a time when most countries in Southeast and East Asia were experiencing the so-called 'Asian Economic Miracle', with GDP growth rates of around 8-10 per cent, might be considered the best-case scenario for the decades ahead. It presupposed rapid or at least steady economic progress in both Asian and Western countries, close and cordial political and economic relations between them, along with peace, mutual respect 'on an equal footing' and much to buy and sell from each other, teach and learn, or give and take in cultural, spiritual, educational and ideological terms. Yet worst-case scenarios are also conceivable-e.g. hostile, conflictual or dangerously unequal relationships among particular countries, fraught with suspicions and misunderstandings-as well as a wide range of intermediate possibilities. Among the latter are the economic downturns precipitated by the financial meltdowns of 1997-8, which have almost certainly brought to an end the decade of exceptionally high GDP growth rates, about which more will be said later.

The main implication for Australia in Rohwer's observation goes deeper, however, than any simple predication about where China and the West will be at in 2020, on either the political or economic plane, or Australia and 'Asia', or Australia and any particular Asian countries. It has to do with our respective notions of our strengths and weaknesses,

In Asia Rising, Jim Rohwer writes about 'Asia' as if all Asian countries and peoples are essentially similar, which is badly misleading. Diversity is the most striking characteristic of all parts of the huge land-mass we call 'Asia', so it is better to avoid the word and refer to the various countries by their individual names wherever possible. This paper will focus mainly on Southeast Asia, with particular reference to the original five ASEAN countries (Thailand, Malaysia, Singapore, Indonesia and the Philippines), with passing glances at several of the Northeast Asian countries.

superiorities and vulnerabilities, be they in material wealth, technical superiority, spiritual or cultural riches, moral values, military power, self-confidence or anything else. By then, Australia will have lost many of the advantages which have enabled us to retain for so long the old colonial-era sense of superiority over people who were widely regarded by our grandparents as 'heathen', 'superstitious' or 'ignorant', some of whom are now becoming eager to reverse or repay that attitude of condescension.

Australian society took shape in an era when the technical superiority and strength of the Christianized West, economic, military and scientific, as against the colonies and semi-colonized nations of Asia, could be confidently taken for granted. Even after World War II punctured our self-assurance about that, and the collapse of the colonial empires taught us we must learn to treat the people of the newly independent countries of the Asia-Pacific region as equals, or at least as potentially so, like most Westerners, we continued to think of ourselves as a cut above nearly all Asians in many respects until quite recently. But that mind-set has become utterly outdated since the dramatic surge of the Asian 'tiger economies' in the 1980s and the transformation of China under Deng Xiao-peng. The fag-end of the decolonisation process, in its mental and psychological aspects, is only now being reached in some parts of our region.

The assertions by Lee Kuan Yew, Dr Mahathir and others that Western societies are decadent and too pampered by their prosperity to match the rapid growth rates of the East Asian tigers, wrong-headed though they may be, are widely shared in many Asian countries. In the decades ahead, we Australians are going to find ourselves dealing with Asian governments, firms and individuals in situations where the pendulum is likely to be swinging more and more in their favour on the score of moral and even socio-economic superiority in spite of current setback. Already it has been observed that 'We no longer command the moral high ground in our negotiations with Asian companies', as an Australian executive in Southeast Asia put it recently, when commenting on the damage caused to our standing in the region by the 1996-97 outburst of racist sentiment in Australia. But quite apart from that problem, a major shift in our relative status vis-a-vis other countries around us is bound to arise in other respects also.

This paper deals only indirectly with those issues, however, being focussed mainly on the prospects of political stability and a continuation of rapid economic growth in Southeast and East Asia. It will begin with an overview of the probable levels of population, Gross Domestic Product (GDP) and per capita Gross National Product (GNP) of the major countries of that region in 2020m as set iyt ub Table 1, as explained below. The future development of the regional international order will then be considered, with particular reference to ASEAN, ARF (the ASEAN Regional Forum) and APEC, and the likelihood of any bids towards regional hegemony by China or Japan. The political and economic prospects of the various Southeast Asian countries most directly relevant to Australia will be surveyed in greater detail. Finally, the likelihood of sustaining rapid economic growth there and of progress towards more democratic political systems will be briefly surveyed.

The impact of the 1997-8 financial crises in Southeast and East Asia could necessitate some modifications to the GDP projections for 2020 used in Table 1 from the medium to the low-level scenario for some countries, especially if the economic down-turn proves more serious or persistent than appeared likely at the end of 1997. While most analysts were forecasting then that growth rates might fall towards zero (or less) in 1998-9 in Indonesia, Thailand and South Korea because of their excessive foreign deft burdens-and to lesser degrees elsewhere-it was widely expected that recoveries should occur within two or three years, after which a resumption of growth rates of 4-5 per cent would occur, although probably not the 8-9 per cent rates achieved in the early 1990s. A setback of those dimensions would not have an enormous impact over the following twenty years, or not sufficient to modify very radically the prognoses for 2020 as set out in columns vi-x of Table 1, of which the medium estimate is based on a 5.5 per cent average GDP growth rate between 1995-2020 for the ASEAN countries.

Rather than attempt to recalculate the figures set out there on the basis of a new set of arbitrary assumptions about the length and extent of the current downturn, it has been thought best to adhere to the mid 1997 figures in Table 1, while adding the warning that the figures for 2020 per capita incomes could prove slightly too high-although just how much too high is quite impossible to guess at this stage.

South and Central Asia, including India, will not be covered, since the issues there are very different, much more diverse and far less predictable. The emphasis here will in general be on the Asian countries of APEC and specifically on Southeast Asia. What happens in the latter is likely to have the most direct impact on Australia's national interests, even though developments in Japan and China (and perhaps Korea and Taiwan also) could well affect the regional international order more fundamentally in the long run. But the time-horizon adopted here extends only to 2020, so developments which may unfold later in the coming century will not be explored if they are deemed unlikely to become significant before then.

Overview: Opportunities and Challenges

By 2020 the countries of the Asia-Pacific region will certainly be very different from today, in many ways, as Table 1 indicates-but how? One has only to look back 23 years at the immense changes that have occurred since 1974 (Appendix A) to realise how unpredictable even the greatest of them can be. In the next 23 years the region is likely to present Australia with great opportunities, but also unforeseeable challenges. The challenges will not be about survival in the face of conventional military threats, such as we have been mainly concerned about over the last sixty years (now most unlikely to recur), but of our ability and self-confidence to adjust flexibly and fast enough as a nation in response to the attractive business opportunities arising there-and the intense competition to seize them-as well as to the political openings that may arise.

The challenges of adjustment will inevitably affect Australia's further growth and identity as a nation still trying to establish an appropriate place and role as an integral member of the Asia-Pacific community. If we seize the opportunities opening up to us successfully, we should find ourselves in a strong position by 2020 to benefit greatly from the rising incomes and growing markets of many Asian countries, thereby gaining in self-confidence as well qualified to operate effectively in those countries and markets. If we fail to do so, we run the risk of falling disastrously behind more and more of our neighbours on various fronts in an increasingly competitive set of races.

As to future scenarios, the two worst for Australia would be a prolonged period of low growth or stagnation in the 'tiger economies' (here assumed to be unlikely, except perhaps in Indonesia) and the rise of an assertive, militarily powerful China, inflamed by militarily powerful China, inflamed by a nationalist urge to repay past insults and wrongs, determined to confront rather than cooperate with nations like the US, Britain, or other European powers-and conceivably also Australia, their cultural and political proxy (in some eyes). A revival of right-wing militarism in Japan could be nearly as worrying, although I believe it is less likely, due to the strength of countervailing domestic forces, which are discussed below (p.10). Indonesia is unlikely to pose any serious threat to the peace and stability of the region, although internal developments there might conceivably cause flutters of concern (largely misplaced) in Australia. Vietnam will not become a major political or economic force until long after 2020. Events in Korea and Taiwan could cause acute international tensions, but more as triggers to underlying rivalries rather than as determinants of conflict.

The configuration of the Asia-Pacific international system, in which the USA will almost certainly continue to play an important, even dominant role, albeit perhaps reduced on the ground in Korea, could be influenced either for good or ill by the changing relativities in economic and military strength resulting from the booming economic conditions across the region over the last decade or more. (Any such changes are sure to be closely interlinked, except in the maverick case of North Korea, which may have been unified with South Korea long before 2020, unless war occurs there first). While slowdowns in GDP growth seem inevitable in most countries, there are strong reasons for believing that growth rates and international trade will remain high for at least the next decade and probably much longer, as consumer demand rises and stimulates steady increases in production, and vice-versa. As in Europe, that sort of growth should make international conflict less likely rather than more.

The probability that major changes in the regional international system will result in serious conflict before 2020 can be regarded as low, for reasons discussed later (p.8ff). Such conflicts cannot be ruled out as a possibility at some point in the 21st century, but in the immediate future they seem unlikely, due to a complex blend of domestic and international political considerations. Frictions, rivalry or hostility between China and Japan-at either a high or a low order of intensity-could in the course of time become a potential threat to international stability, however, especially if the USA becomes disinclined for domestic reasons to maintain the political will to preserve a regional balance of power. That is more likely to be a longer-term change than a short-term one, however.

In China, a wide range of domestic outcomes is imaginable, from continuation of rapid growth to 'Sinosclerosis', but all are too cloudy to foresee with confidence. In Japan, a lurch to the right is not inconceivable, but unlikely; equally probable is gradual but very slow progress towards political reform, if the LDP and the bureaucracy can turn away from their previous self-destructive ways. Built-in political constraints make major shifts in either direction unlikely. But the various scenarios imaginable are too speculative to be worth pursuing in detail here.

Predictions in matters of this kind are notoriously unreliable. Twists of fortune similar to the huge changes of the last quarter-century, mentioned in Appendix A, could no doubt arise between now and 2020. But they are less likely to have such a great impact as hitherto because the region has now settled down after the tumultuous upheavals resulting from their struggles for independence and the turbulent great-power rivalries that dominated the post war decades, from which the ASEAN region was only starting to emerge in 1974-5. The region had not by then achieved the degree of international cohesion and economic maturity that has developed over the last decade and that may be expected to continue.

So while there will almost certainly be significant and unexpected changes of unimaginable kinds over the next twenty five years, I doubt they will be of such a far-reaching character as in the past-unless a big shift in the international order occurs (e.g. a resurgence of Chinese nationalism and expansionism, or a China-Japan conflict, which are both highly unlikely, in my view).

A Bird's-Eye-View of 2020

The figures set out in Table 1 regarding probable levels of population, GDP size and per capita income levels in 2020 were calculated on the basis of high, medium and low projections, all based on assumptions which seemed reasonable at the time (mid 1997). The possibility of massive, unpredictable natural disasters (Appendix B) and unforeseeable upheavals in the global or regional trading and financial systems had to be left out of account, since the probabilities were quite incalculable. No attempt has been made to modify the table in the light of the regional financial crises of 1997-8 for two reasons: its long-term impact over a period of over twenty years is not likely to be substantial and the difference it will make over that period is not likely to shift the 2020 per capita income figures far outside the low-growth scenario set out in column x. The figures in that column could prove slightly too high for some countries, but might equally well be too low.

 

Table 1. Population and Various GDP Projections, 1995-2020

 

Popul'n

Popul'n est.

GDP

GNP per cap.

GNP per cap. [PPP]

GDP est.

GDP per cap. est.

GDP per cap. High est.

GDP per cap. Low est.

 

1995

mill.

2020

mill.

1995

$ bill.

1995

$

1995

$

2020

$ bill.

2020

$

2020

$

2020

$

i

ii

iii

iv

v

vi

vii

viii

ix

x

Indonesia

198

264

197

970

2 434

977

3 737

6 643

2 031

Malaysia

20

30

82

4 010

6 873

444

14 834

27 462

8 396

Singapore

3

3

84

28 570

15 670

214

71 258

195 661

96 748

Thailand

59

72

165

2 713

4 764

756

10 449

18 580

5 680

Philippines

69

100

73

1 105

1 761

400

4 004

3 742

2 314

Vietnam

74

112

19

219

N/K

103

915

742

459

S. Korea

45

52

416

9 413

10 183

1 345

25 859

64 465

19 709

Taiwan

21

26

256

12 439

N/K

863

33 163

42 123

26 045

China

1 206

1 488

2 024

506

1 985

3 511

2 364

3 465

1 713

Japan

125

123

4 871

39 200

14 800

8 032

65 034

82 076

50 271

Australia

18

24

347

21 524

15 439

737

30 712

45 066

27 603

Sources -

Columns ii-iii. United Nations 1995, World Population Prospects. The 1994 Revision. (New York: UN): projections based on medium-level rates of annual increase. Taiwan's 2020 population, as listed in iii above, is a crude ball-park guesstimate.

Columns iv-vi. Asia-Pacific Economic Group, 1966, Asia-Pacific Profiles 1996.

Column vii-viii. Projections by Dr Hal Hill assuming

5.5% Indonesia, Malaysia, Thailand, Philippines, China, Vietnam

4% Singapore, Taiwan, South Korea,

2% Japan, Australia

Columns ix-x. Projections by IRS Statistics Group assuming

High estimate: at

8% p.a. average increase for Indonesia, Malaysia, Singapore, Thailand, China and South Korea

5% p.a. for Philippines, Vietnam, Taiwan and South Korea

3% p.a. for Japan and Australia.

Low estimate: at

5% p.a. Singapore

3% p.a. Philippines, Vietnam, Taiwan, South Korea, Malaysia, China and Indonesia

1% p.a. Japan and Australia.

Notes.

  1. The GDP per capita projections for 2020 given in columns viii-x can be regarded as little more than the crudest estimates, being broadly based on high, intermediate and low growth rates.
  2. N/K-not known.
  3. Purchasing Power Parity: a method which converts the percapita GNP of each country included so that they can be directly compared on the basis of purchasing a representative basket of goods and services rather than using exchange rates. As the calculations to derive PPP are based on statistical indices which are necessarily selective and on methodology subject to debate amongst statisticians, all such figures should be treated as approximations.

On that set of assumptions, the prospects for economic growth and political stability in the region can be summarised broadly as follows:

  • The foremost East and Southeast Asian economies, Japan, Taiwan and Singapore and perhaps South Korea will almost certainly have achieved levels of per capita income and economic sophistication by 2020 approximating those of the wealthier OECD countries (well above or close to Australia's). Malaysia and Thailand will be catching up steadily although still far behind Australia. Political stability is unlikely to be upset in any of these countries more than momentarily, in my view, unless reunification of Korea proves exorbitantly costly-as it might-or the Taiwan-China problem creates major difficulties for Taiwan (see below).
  • Indonesia and China, the two high-population countries with huge agricultural sectors still to be drawn into the global trading economy, will at best have relatively low per capita income levels (and wide internal disparities of wealth and income), although each will by then have high aggregate GDP levels and huge domestic markets. Political upheavals are easily conceivable in both countries, although I would set the odds more highly in favour of overall political stability over the next thirty years, for reasons discussed below.
  • Of the middle-income countries, Thailand should manage to recover from its 1997 property-market collapse and financial sector troubles relatively soon (thanks to the structural changes in the economy and impressive political progress there since the early 1980s); hence it should be by 2020 a modestly prosperous country, well ahead of Indonesia and the Philippines in per capita GDP but falling far behind Malaysia, with a population close to Zero Population Growth (ZPG) at around 72 million-provided the AIDs epidemic does not prove utterly disastrous. The exceptionally high growth rates of 9-12 per cent in the recent boom years will not be reached again after the 1997 crisis, although the basics of the country's macro-economic development appear to be essentially sound.
  • In the Philippines, even if the modest lift in growth rates achieved under President Ramos since 1992 can be maintained by the next two incumbents (which should not now be very difficult if political instability can be avoided), the country will still be far behind most of its ASEAN partners in terms of per capita incomes.
  • In Northeast Asia, Japan and China are likely to be the most unpredictable of all countries of the region, both domestically and in their foreign policies (see below, pp. 10-13). South Korea's future will depend on whether and how the collapse of the North Korean communist regime occurs and the terms on which reunification takes place, which may happen fairly soon. But the economic strains imposed, estimated at over US$ 40 billion, vastly more than South Korea alone can mobilise, are so great that predictions about it are barely feasible. Taiwan's future is also highly unpredictable, for it is far from clear whether it will still be effectively independent, or have been incorporated by China, or drawn into some loose commercial association short of full political integration. But my guess is that something like the last of those choices is the most probable.
  • The pattern of demographic development in the East Asia region will almost certainly be characterised by a decline in birth-rates and of total numbers towards a point of ZPG by 2020 in all countries except Malaysia, Vietnam and (to a lesser extent) the Philippines-although birth-rates are already falling in those countries too, albeit slowly. This state of affairs is radically different from the Malthusian nightmares looming in Africa and South Asia-and Australians should be profoundly thankful for that small mercy.
  • Disparities in per capita income levels will widen greatly among the ASEAN countries over the next twenty years (Table 1, column viii), with Singapore far exceeding all its neighbours, and perhaps even Japan, whereas Vietnam, Laos, Cambodia and Burma will at best be about where Indonesia was in 1990. The Philippines and Indonesia could have per capita income levels three or four times what they are today, but they will be far behind Malaysia and even Thailand, unless some unexpected shift in development patterns occurs.

The Asia-Pacific International System

The stability of the broader Asia-Pacific international order and of the various countries of Northeast Asia in particular is far more problematic than that of the ASEAN region. If troubles arise in the former area they will cause serious repercussions in the latter, which must be of great concern to Australia too.

In Southeast Asia, the region of most direct strategic and political concern to Australia, since our security is closely intertwined with the security of our ASEAN neighbours (with several of whom we have treaty commitments), it is hard to imagine serious conflicts arising between the various states. They are even less likely to occur in the next quarter-century than in the last now that Vietnam has joined ASEAN and has an interest in promoting its joint interests.

That does not mean there will be no political rifts among them. Such could easily arise over questions of how relations with China, Japan and the USA should be handled by the newly enlarged ASEAN, as well as the future of APEC and the international trade issues associated with it, or the EAEC proposal and the broader set of issues associated with the 'Asian Values' controversy. It can be predicted that the enlarged ASEAN will find it much harder to reach consensus on some of these issues than the original ASEAN grouping did, which was hard enough. Vietnam's traditional hostility to China (and contiguity to her) adds a complicating element that has not been present so far. (Thailand, the closest of the original ASEAN members to China, has generally been careful not to offend her since 1975.) Divisions could easily arise among the ASEAN countries on how to respond to a more assertive China or a rearming Japan, which would require delicate negotiations and political manoeuvring by them-and by Australia. But that is unlikely to create any major shift in our political relations with the ASEAN nations, who will be regarded increasingly as our foremost diplomatic concerns.

The most formidable problems are likely to arise in the wider East Asian international system, within the China-Japan-US triangle, especially if China becomes determined to drive a wedge diplomatically between the latter two, as could easily be imagined. Japan's reluctance to become drawn into an antagonistic relationship with China will almost certainly persist, even though the Japan-US connection of the last half-century seems to have been rejuvenated recently and is so important to both countries that it is unlikely to be modified significantly. The Taiwan issue is most likely to be the key determinant of both Japan's attitude to China and vice-versa.

Any disruption of the current uneasy equilibrium in the triangular balance between China, Japan and the USA will impose potentially serious strains on the ASEAN governments, which will find themselves under great pressure to take sides, whereas they will probably be most reluctant to do so. They will almost certainly prefer to maintain a vague neutrality or non-aligned stance-which may prove extremely difficult.

ASEAN, ARF, APEC & EAEC

It is very likely that significant changes will occur in the major international organisations of the Asia-Pacific region over the next quarter-century, as has also been the case in the last. My guess is that ARF (the ASEAN Regional Forum) will become an increasingly important body for regional deliberations on political and security issues in the entire region, both Southeast and Northeast Asia, although not on a much more institutionalised basis than now. Because ARF already exists, and has begun to prove its usefulness to China and Japan in a region where other security arrangements may prove very difficult to create, or will remain predominantly bilateral, with little prospect of melding into multilateral arrangements (despite US and Australian security planners' talk about them as 'a web of mutually reinforcing ... security relationships'), it could well grow on a piecemeal basis without spawning any elaborate institutional structures, in much the same way as ASEAN has done over the last thirty years.

It is possible that ASEAN may suffer some loss of cohesion from its increase to a membership of nine-and probably ten-unless it abandons its reliance on unanimity and consensus about key decisions. Yet the organisation will remain useful to its members as a symbol, above all, of regional identity and desire for consensus, even if that may be hard to achieve at times. It will not be superseded by ARF but could be much enhanced in stature by it.

APEC may over time prove to be a less important body for trade negotiations than it has seemed to Australians since 1990 (although far less so to the USA). The concept of EAEC (East Asian Economic Caucus), although hitherto not much more than an idea favoured by the Malaysian government, may take root in various ways, partly as an alternative or rival to the APEC framework for economic cooperation. Malaysia and China may attempt to upgrade it into a structure with a political agenda and implications as a means to reduce US and other outside influence in the region, although they may be resisted (or at least limited) by Japan and possibly some other ASEAN countries. The outcome in any such tug-of-war is highly unpredictable.

Australia's primary interest in these bodies is to ensure that they succeed in providing effective forums for security and economic negotiations within our region on a regular basis. Since we are already invited to the annual ARF meetings, are members of APEC and are a dialogue partner to ASEAN (but would almost certainly be excluded from EAEC), the issue of our membership of these bodies is a matter of not much more than symbolic importance. Our exclusion from ASEM so far has been an unfortunate setback to our efforts to increase our involvement in the political and economic life of the region, so it is highly desirable for symbolic reasons that we should seek to reverse this as soon as possible. But it is the success of this emerging security architecture in enabling the relations between the major powers of the region to be managed smoothly that will matter most to us, not the essentially symbolic issue of our exclusion or participation.

Japan

In contrast to the dominant part played by Japanese capital (and, in a quiet way, its back-room government diplomacy) over the last twenty years, we can probably expect some reduction in Japan's political and economic clout in Southeast Asia in the decades ahead, and perhaps also some reduction in the volume of Japanese private capital flows into the region. Unless Japan can overcome its 1997-8 economic stagnation and political gridlock much more vigorously than hitherto, here economic leverage within the region seems sure to decline.

Japanese military, naval and air power, already formidable, will almost certainly continue to grow substantially, giving her a capacity to project force off-shore to a much greater distance than hitherto (limited, so far, to her coastal waters). But the reluctance to alter the constitutional ban on anything more than self-defence forces is unlikely to change rapidly, although some pressure to do so may gradually bring about incremental extensions via various let-out clauses, as over the past decade. Overall, however, it seems more likely that militarist or expansionist sentiment will diminish rather than increase in Japan as the older generation dies off, unless some major political shakeup occurs threatening her security. Some strengthening of ultranationalist forces may be seen in the short run, but how far that would go before a counter-current sets in among left-of-centre parties is unpredictable. The latter still retain their constituencies and could gain strength if the LDP again splits into warring factions.

Strains within the LDP and the urgent need for political reform, particularly in the structures and powers of the bureaucracy, have been obvious for a long time but little progress has been made, suggesting that the likelihood of rapid or substantial change in the basic political or social structure of Japan is not high even over the next twenty-plus years. In such circumstances, it is not easy to imagine that shaky Japanese governments will be in any position to adopt stronger foreign policies in either Northeast or Southeast Asia than they have done over the last half-century. Japan's enduring security goal is to ensure that China does not develop into a regional hegemonial power which Japan would be forced to resist. After that, her main concerns will probably be to avoid conflicts in her relationships with the US (over bases in Okinawa), with China (over Taiwan), and with the two Koreas (over the unification issue).

China

The possibility of major changes in China is greater than in any other part of the region, and the range of eventualities far wider, from relative stability and strong central control by the government of the People's Republic of China (PRC) to 'sinosclerosis', or serious political disintegration, military rule (or attempts at it), regional secession, or episodes of 'expansionism' and (probably limited) war. But my prognosis is that the latter of these are not likely to occur early in the next century unless central authority unravels much more suddenly than appears probable just now. They cannot be ruled out entirely as the transition from a communist regime towards 'market-based socialism' continues. But both the political condition of the country and the state of the economy currently seem more conducive to continuity than to radical changes. In the twenty years between Mao's death and Deng's, China has peacefully negotiated a massive transformation, in contrast with which the problems of the decades ahead look relatively minor.

The current post-Deng leadership group under Jiang Zemin seems to be settling into the saddle without serious in-fighting (so far), despite earlier predictions; so it is not unduly optimistic to conclude that something like the present mix of leadership elements made up mainly of modernisers and economic reformists may persist for some time. The longer it lasts, the more durable it will probably become, although factional upsets may occur from time to time.

The economy has been brought pretty well under control over the last few years, with inflation curbed despite high growth rates, and widening regional discrepancies not yet of unmanageable proportions. It is to be expected that GDP growth rates may halve to about 4 per cent per annum within a decade (still more than twice those of most Western countries) although the aggregate GDP will surpass that of Japan and USA in the second decade of next century. This means a huge and growing consumer market, extending well beyond the cities into rural areas, even though average income levels will still be low, income distribution seriously regressive and pockets of acute poverty still extensive. China in 2020 will still be a poor country struggling above all to become less poor. It will also be obsessed with the problem of maintaining territorial unity and guarding its border regions against outside interference, the historic concerns of all Chinese regimes.

Political intervention by the People's Liberation Army (PLA) cannot be left out of consideration, but the odds currently seem strongly against it. The PLA leadership is now geriatric and old-fashioned, unlikely to command the economic know-how to run the country and possessing few political resources (control of the Communist Party in particular, still an important instrument of government) apart from strong nationalism and a claim to its patriotic credentials from pre-1949 days. The task of military modernisation will take a long time to carry through, and until that is done military adventures against Taiwan or even the Spratly Islands could entail such risks of failure that prudent officers would hesitate to incur them. By 2010 or later that state of affairs may be changing, but it will be a slow process.

The Taiwan issue is likely to dominate the political scene over the decades ahead, with highly unpredictable outcomes. After the recovery of Hong Kong, the goal of recovering Taiwan either by peaceful means (blandishment towards economic unification and gradual moves towards closer political ties) or by threats to use force could prove politically divisive in Beijing. The two strategies are not mutually compatible, since the latter would wreck any chance that the former might eventually succeed, and it could alienate Japan and the USA seriously. But any resort to force would be immensely risky for the PLA, since even a minor setback would end senior military careers and wreck any hope of ever regaining Taiwan. It may come to that if a hyper-nationalist China feels so provoked by the USA or Taiwan that it throws caution to the winds. Yet Chinese foreign policy has hitherto been pretty shrewd and cautious in not undertaking adventurist policies around its borders. (Watch out, however, for developments around Sinkiang and Tibet for possible surprises.) But by 2020, China will have much greater capacity than now to exert greater economic and political pressure on Taiwan, as well as military. So the case for accommodation rather than resistance on Taiwan's part may be weaker than now.

Is regional disintegration due to widening disparities between the coastal and inland provinces in China likely to be a serious possibility by 2020? My reading on this issue suggests that it is greatly exaggerated in a lot of foreign commentaries. Certainly, the provinces ignore many directives from Beijing, but they stop well short of overt defiance. Between now and 2020 we may see pendulum swings in both directions in various parts of the country, but nothing remotely like a return to 1930s-style war-lord rule (when the central government was very weak), or the erosion of central control over national finances, or the economy generally.

Economic liberalisation-and in some respects social and institutional-will continue to precede political liberalisation, this being the one huge difference between the reasons for China's successes since 1979 and Russia's failures. The Chinese Communist Party is unlikely to release its tight grip on political power unless a crisis occurs. Yet there have been various signs of minor incremental improvements in legal procedures and even prison conditions since Tienanmen, all in a very Chinese way, without reference to 'Western style human rights'. We may expect a continuance of that trend.

Almost certainly we'll be hearing a great deal more about 'Asian values' between now and 2020. It's a good rallying cry to get other East Asian countries on-side against the USA and its allies, as well as to strengthen nationalist solidarity at home in the face of calls for greater democracy or human rights along Western lines. I am not optimistic that the latter will make much headway in the short run in a country where there has been such a slim tradition of representative government or strong, autonomous civil society over the centuries, or in modern times. Brave dissidents will go on fighting for those goals-and Hong Kong may prove a difficult morsel to digest into a communist country, hence a stimulus to efforts at reform-but the odds against any would-be dissidents or reformers will continue to be formidable, even if a strong urban middle class is soon to emerge.

Australia's Southeast Asian neighbours

Indonesia

Any predictions about what Indonesia's situation will be in 2020 are currently overshadowed by the question of how successfully and quickly the country will recover from the acute economic and political crisis of 1997-8. Indonesia has been the most severely hurt of all countries in the region by the currency meltdowns, aggravated further by the damage caused by the 1997 forest fires, a severe El Nino-induced drought and political uncertainties associated with the imminent presidential election. Rudimentary estimates of a fall in per capita income levels due to the declining value of the Rupiah from about $1000 per annum to less than $300 are misleading since calculations on the more reliable basis of purchasing power parities (PPP) would probably not show as drastic a figure as that. But the collapse of purchasing power has certainly been disastrous. The steps necessary to restore the economy to health will be difficult although not impossible to devise, since its basic strength has been greatly enhanced over the last thirty years. But the capacity of the existing political system to carry out such measures is highly problematic, due to the unresolved 'succession problem'.

If President Soeharto remains determined to cling to power until 2003 without designating and grooming a successor, the New Order regime could suffer serious and destabilising arteriosclerosis. No other country in the region has made so little progress in recent years towards greater popular participation of policies as Indonesia. It is widely recognised there that major changes are long overdue. The issue of how the transition from the second to the third president of Indonesia is to be brought about, currently quite unpredictable in the troubled conditions of early 1998, could prove crucial in two respects. One, a turbulent or contested transition could seriously delay the economic recovery and possibly wreck any prospects of a return to the 1986-96 trajectory of rapid economic growth. Two, any regime change which fails to widen the scope for greater political participation, openness, accountability to the public and flexibility over the years ahead will probably remain sclerotic and incapable of adapting the institutions of government to the pressures imposed by the globalisation of international commerce and popular culture.

It is too much to hope for any great leap forward towards fully democratic institutions in Indonesia in anything like the Western sense of that word. The best that can be hoped for in present circumstances is a series of incremental steps in that direction which over time will open the way towards further and more effective, fairer representation of societal forces and opinions, in accordance with local ideas and traditions of musyawarah (consensus), over the course of time. The Armed Forces dominance of the state and its instruments of social control is most unlikely to be significantly reduced (as it has been in Thailand) within a generation of two. But some senior members of the Armed Forces are said to be increasingly aware that the system must be loosened up to a greater degree. How that might be done is an open question, too complex to go into here.

The role of the growing middle class in all this (commonly said to number about 9 per cent of Indonesia's slightly more than 200 million people) is hard to predict. It is in relative terms the smallest and politically least influential middle class in Southeast or East Asia, internally fragmented in its political allegiances and economic interests, hence much less likely to take significant political action than its counterparts in Thailand, Taiwan or South Korea have done since the 1980s. As a new generation of young, competent managers and technical experts grows into a larger and more influential set of economic decision-makers, something more like the conventional picture of a bourgeoisie, they may eventually be able to exert some pressure on the government to loosen up some of its controls and allow a more pluralistic set of socio-economic structures to emerge. But not for some time yet. Meanwhile, they are unlikely to be enthusiastic about far-reaching democratisation, with its alarming implications that they could be outvoted by the rural heartland of the more conservative Muslims. The conventional wisdom that economic growth gives rise to demands for wider democratic rights among the middle classes has had little relevance to Indonesia so far, and is unlikely to do so in the immediate future.

If the processes of post-Soeharto regime change give rise to serious instability or social turmoil, as in 1965-6, one possible outcome could be the politicisation of the santri (devout) Islamic groups, which might be very difficult even for the Army to control. Many of the 85 per cent of the population who are nominally Muslim are not santri and are largely secular in outlook, rejecting 'fanatical' or fundamentalist Islam. Throughout the Soeharto era, the socio-religious rifts arising out of that division have been damped down, and most Army officers would be highly concerned at any resurgence. But there have been stirrings recently which indicate that many santri believe their star is now rising again, after a long period in eclipse. It is fruitless to speculate further on this matter, however, since many unforeseeable factors come into play. On the basis of Indonesia's past history we can safely assume that the authorities will probably succeed in damping down Islamic militancy by well-tried methods of cooptation and repression-with more of the former being preferred, as the latter can be dangerous to social and political stability. Indonesia has become outwardly more Islamic in observance over recent years, although in many quarters more secular and materialist in substance, trends that will almost certainly continue.

On the other side of the political ledger, it is the case that most Indonesians have experienced big improvements in their living standards under the New Order (prior to the 1997 collapse) and will probably be unwilling to see the current socio-political system overturned by populists of any political or religious colouring. Revolutionary or radical changes are less likely in the immediate future than incremental changes. Despite smoulderings of discontent in many quarters, and continued socio-economic and religious tensions just below the surface, most Indonesians are very nervous about anything like a return to the terrifying socio-political conflicts of 1965-6. If a post-Soeharto government, backed by and probably dominated indirectly by the Army, can restore economic growth along 1966-96 lines, it should be able to retain the political influence it currently wields for a long time to come. But much will depend on how the cards play out over the next few months, or years.

Another big question-mark hanging over the socio-economic future of Indonesia and the politics of the succession to a post-Soeharto regime arises over the unique position in Indonesian life of the Indonesian Chinese minority, approximately 6 million or so. Because of President Soeharto's close associations (and his children's) with the super-rich heads of the largest conglomerates in Indonesia, resentment against them-and, by extension, the entire Chinese community-is widespread and deep, particularly in santri circles. This has aroused great concern that anti-Chinese outbreaks may occur after he goes (or even before), as occurred most alarmingly for them in 1965-6. While the possibility of something like that occurring cannot be ruled out, the circumstances of the 1990s and the 1960s are utterly different in so many ways that it is unlikely to be on anything like the same scale as then. The Chinese are becoming more integrated into Indonesian society (slowly) and are taking on Indonesian business partners and suppliers who have an interest in stability, not socio-economic upheaval. That applies also to many military officers who have close patron-client ties to wealthy Chinese. Notwithstanding some current reports, it is unlikely that the military would allow or encourage anti-Chinese rioting to get out of hand, as it certainly did in the 1960s. On the other hand, a post-Soeharto regime may be more inclined than he was to treat the Chinese severely and even flirt with anti-Chinese trouble-makers, even at some cost to the economy. Overall, I am pessimistic that the position of the Chinese in Indonesian society will by 2020 have become better or radically different from today, since the deeper sources of social tention and resentment are likely to persist for at least another generation, probably several; but I doubt that it will deteriorate greatly, either.

To summarise, Indonesia may at best emerge from its present economic and political difficulties to resume a GDP growth path of about 4-5 per cent within another three to five years, which could give rise to per capita income levels by 2020 of about US$2-3000 (but probably not to a level about $4000, hence far less than the figures for Malaysia and Thailand), assuming all goes well. At worst, it could experience some years of political and social instability after Soeharto goes, from which a recovery to the sort of economic trajectory followed over the past thirty years might be very difficult to achieve. Fantasy scenarios such as explosion of violence comparable with 1965-6, or a rise in Islamic fundamentalism, or regional dissidence of the 1950s variety capable of threatening the territorial unity of the nation, seem highly unlikely for various reasons-although not as improbable, unfortunately, as they seemed two years ago.

Singapore

Singapore in 2020 will still be a small city-state of less than 3.5 million people, but it will almost certainly be a major economic power-house in the Southeast Asian region, with extensive off-shore investments, high-tech industries and efficient financial or telecommunications services on-shore resulting in amazingly high per capita incomes which will by then be far greater than those of the average Australian. It will very soon be rivalling our educational institutions as a venue for off-shore higher education for the well-to-do middle-classes (most of them Overseas Chinese) of the other ASEAN countries. Its political influence within the region will continue to be utterly disproportionate to the size of its population because of its high skills base.

Any tendencies towards economic and political integration of ASEAN are likely to benefit Singapore more than any other country in the region. By 2020 Singapore businessmen, politicians and intellectuals will long since have cast off the cloak of deference to Westerners and Western ideas which they used to adopt in the earlier post-independence decades and will become fully accustomed to dealing with Australians, in particular, on terms of equality, to say the least, or even of mild (or not-so-mild) condescension. In that respect, Singapore's relationship with Australia is likely to be the bell-wether for those of other Southeast Asian countries more generally.

Yet there is also a down side to the rosy picture painted above. The political system is unlikely to change greatly before 2020; it will probably persist with only minor modifications and Australians will probably continue to view it with some distaste, which will be reciprocated to an increasing degree. The People's Action Party (PAP) will remain an essentially Leninist type of cadre party, with a highly authoritarian ideology and hostile attitudes to opponents and dissentients. That is likely to alienate some of the best and the brightest of its young people, causing them to emigrate; but that is a cost the PAP evidently feels it can bear. The third and fourth generations of PAP leaders (assuming the current set are the second) are unlikely to differ much from their predecessors, due to the indoctrination they receive in their youth. PAP governments are likely to retain the same political hegemony as they have wielded since the early 1960s, tolerating opposition parties only as a form of safety valve and a token gesture towards foreign critics. While opposition parties have frequently attracted over 30 per cent of the vote in elections (mainly from the less-well-off Chinese-educated, non-English-speaking artisan and shopkeeper classes), the latter will still be excluded from significant representation in the parliament or government service and their few parliamentary representatives marginalised. Opposition parties could even find it increasingly hard to maintain their electoral appeal as the population becomes more middle-class in outlook and consumerist in attitudes.

Whether or not such a tightly controlled society will suffer some long-term damage through a loss of creativity and imagination, unwillingness to criticise officialdom or to speak out boldly against abuses of power is hard to predict. (Evidence pointing in both directions could be found in 1996-7.) The dominating influence of Lee Kuan Yew in stifling dissent since 1959 has been a major factor in this, but he will presumably not be around for ever. His son may continue the tradition, however. Yet it is worth remembering that the Singapore government has been very pragmatic about changing its policies when they are not working well. It has been pushing hard to enhance the entrepreneurial flair of its wealthy capitalists over the last decade, with some success, after twenty-plus years of offering them scant encouragement. It is now actively pressing them to invest abroad more vigorously in other Southeast Asian countries (and Australia) and to take greater risks. So the climate of business has been changing significantly since 1985 and is likely to go on doing so. That is bound to impact on both the economic structure and the intellectual climate more generally over the decades ahead, not rapidly but inexorably.

Malaysia

There is little reason to believe that Malaysia will not experience much the same degree of political stability and economic growth between now and 2020 as it has had since Dr Mahathir became Prime Minister in 1981. That means it will have a population of around 30 million (roughly 50 per cent more than in 1995) and per capita income levels of nearly US$15 000, the highest in Southeast Asia after Singapore. But as birth rates will be declining steadily by then, the rate of growth of population will be slowing, although at a pace still well behind its neighbours.

Two main question marks arise over the stability of the country's racial balance and the leadership of UMNO. On the first, it can be confidently predicted, I believe, that nothing like a repetition of the May 1969 race riots and the preceding racial tensions of the 1960s is now likely. The ethnic Chinese proportion of the population (which in the 1940s seemed likely to exceed the Malay proportion) is now about 28 per cent and has been declining steadily as a fraction of the total population since the early 1950s. By 2020 it will probably be well below 25 per cent. Most Malaysian Chinese have come to accept that they cannot expect to exercise effective political power in Malaysia and will have to learn to live with an economic system that entrenches positive discrimination in favour of the Malays (but one in which most ethnic Chinese are still wealthier than most Malays). Many Chinese had not accepted that state of affairs in the 1960s, and the Malays were still apprehensive that they might find themselves permanently confined to second-class citizen status in their own land. But the New Economic Policy (NEP) of 1971-90 has changed all that irrevocably, by greatly boosting the Malay share of the country's corporate wealth while also enabling many Chinese to get a larger slice of an expanding economic pie. So the socio-economic situation is now one which both sides find acceptable, even though there is still a lot of grumbling in private about it. Provided the economy continues to grow at more than 8 per cent per annum-and there are no reasons why it should not over the longer term-the multiracial character of Malaysia should pose no great problems. Issues of social justice, inequality of income distribution, environmental degradation, 'money politics' (i.e. the intermeshing of business deals with cash contributions to political parties or factions) and so on will continue to pose political difficulties, but they should cut across racial lines rather than reinforce them.

There will be no significant change from the current political system wherein UMNO dominates and the parties supported by the Chinese are only a weak opposition force. Malaysia is likely to remain a 'repressive-responsive' political system (Crouch 1996) in which parliamentary elections provide a significant element of political competition, especially within UMNO, but Malay dominance is virtually entrenched. If Mahathir is succeeded by Anwar Ibrahim there may be some slight change in the tone of political discourse in a more liberal direction over the following years, but no great change of course.

If Anwar's opponents forestall him, we may see a shift towards a more Malay-supremacist form of politics, with greater stress on Islam, or else more blatant manifestations of 'money politics', which has become increasingly open since the 1980s and will no doubt continue. The emergence of a new class of Malay capitalists whose wealth is due in large part to their political connections has been one of the most striking developments of recent years. It will no doubt continue, although probably not to the same extent as in Indonesia, due to the more open and competitive nature of both the economic and the political systems, and the relatively entrenched rule of law and the judiciary in Malaysia.

The Islamic character of the state is more unpredictable, but that could have been said even more strongly just after the Khomeini revolution in Iran (when Anwar was regarded as a Muslim firebrand, before he was recruited into UMNO and the national leadership) and not much has changed since then. At a formal level it will no doubt continue to be emphasised, but substantively it is hard to imagine key national policies being much affected.

Mahathir's inclination on the international affairs side to push strongly for EAEC as against APEC and to put great stress on 'Asian values', along with China, as against Western values, may be toned down slightly by his successor, whoever it may be-or conceivably pushed even harder. That is more likely to depend on the international context than the local.

Thailand

Prior to the 1997 collapse of the property and share market in Bangkok, with its threats to the banking system also, it might have been predicted that there was no obvious reason why the astonishingly high growth rates Thailand has experienced over the last decade (and the impressive progress made towards a more democratic system of government) should not continue until 2020. If so, the country would by then be one of the wealthiest as well as largest (over 70 million population) of the 'Young Tigers' of East Asia, hence a potentially very significant market for Australian exporters. But if the current economic crisis worsens, both the political and the economic stability of the country could be seriously impaired. The high growth rates of the early 1990s, over 10 per cent per annum for several years, will certainly not be achieved again in the immediate future; the danger that they might even fall far below 4-5 per cent for several years before recovering cannot be ignored.

Hence we need to consider both an optimistic and a pessimistic scenario for Thailand. That requires an assessment of the factors that have been responsible for the high growth and (relative) political stability of the last decade, along with some guesses about their durability.

The political party system. The parliamentary system and political parties had only shallow roots prior to the 1970s and even today are not much respected by bureaucrats or even Thai political scientists, who regard party politicians as self-interested and venal. And yet Thailand has experienced more substantial political change in a generally more democratic direction over the last quarter-century than any other ASEAN country. The party system gained strength in the 1980s under General Prem Tinsulanond, who resisted several coup attempts by the military and prepared the way for the series of party-led governments since Chatichai Choonhaven's in 1988. But 'money politics' has become a major problem and with the recent collapse of the property boom and the high growth rates of the last decade there is a danger that political stability may be hard to sustain in the years ahead, which could again lead to calls for 'strong-man' non-party rule by technocrats under military sponsorship, as in 1991-2. Old-style military rule seems unlikely henceforth. My guess is in favour of an optimistic scenario that by 2020 the party system and parliament will be working a lot more effectively than hitherto, with about four major parties and more stable coalitions than in the past. But more pessimistic scenarios may also come into play.

Economic growth and structural change. Both have been impressive over the last twenty years, although the collapse of the property market boom of the 1990s has created serious problems for the banking and financial system more generally. But some economists regard this as a relatively minor and remediable upset, since the basics of the macro-economic structure are still in good shape. Thailand is already following down the path of the Newly Industrialising Countries (NICs) as it moves out of low-wage manufacturing exports towards higher value-added products, similar to Singapore and Malaysia. Further progress in that direction will require a major up-grading of educational standards and wider access to secondary education, which will be difficult but not impossible to achieve. GDP growth rates will probably fall from above 8 per cent to 4-5 per cent (desirable, perhaps, on purely social grounds in any case)-and there is some danger that the high costs of urban infrastructure and environmental improvement could become a burden in the years ahead, as also the social and budgetary costs of containing AIDS. Despite that, Thailand should be well on the way to NIC status by 2020.

The economic predominance of the large Sino-Thai conglomerates since the 1960s is almost certain to continue (and is one of the key factors responsible for Thailand's rapid economic growth since then) and is being followed increasing by the emergence of Sino-Thai leaders of political parties, a new phenomenon. Because of the high degree of integration of the Sino-Thai minority into Thai upper-crust society, this will probably not create racial frictions as it might in other ASEAN countries, although one cannot be entirely confident about that.

Will it matter to Australia if progress in Thailand stalls into a decade or more of stagnation? In economic terms, not greatly, apart from the loss of a potentially lucrative market. But Thailand is much more than just a market. It is one of our most cordial friends and allies in the region, with few points of friction. Thais interact easily with Australians on a social and business level. It is very much in our interests that she should overcome her current crisis and maintain her political influence in the ASEAN region.

The Philippines

By 2020 the Philippines could have long since recovered from the economic decline under the Marcos dictatorship (1972-86) and the later malaise which reduced her from being the second wealthiest country in East Asia in the 1960s to 'the sick man of ASEAN' in the late 1980s. The economic reforms and sharp rise in GDP rates under Ramos (1992-98) to around 4-5 per cent per annum in 1994-96 signify that the country is 'catching up with the 'tiger economies'', although still well behind them in growth rates and per capita GDP. But provided all goes well politically in the post-Ramos years (perhaps an even-money bet, or slightly better, just now) there are good prospects of a more rapid catch-up, which could continue for years until rural poverty is gradually reduced. With over 5 million overseas contract workers and an estimated 2 million professionals and graduates living overseas, the Philippines has been exporting skilled labour and (in terms of their education costs), a huge amount of capital to wealthy Middle East countries and the USA, estimated at many billions of US dollars in recent years. But there are signs that this trend is now being reversed as the economy improves at home and a trickle of expatriates is returning home. Cumulatively, that trend could produce a major acceleration of GDP growth in the years ahead, although from rather low income levels.

In political terms, little change is likely in the Philippines, although attempts to revitalise the formally democratic constitution, which has long been dominated by the 'old oligarchy', are likely to make some modest progress. A more competitive economy and the increasing pluralisation of the society since the end of the Marcos era have begun to erode the power of the old families perceptibly, although their political dominance has only been marginally reduced so far. Neither a revival of the former left-wing popular insurgencies, nor of the Muslim secessionist movement in the south, nor of military take-overs such as plagued Cory Aquino's regime, seems at all likely under present conditions.

For Australia, the scope for cooperation in various educational, cultural and religious spheres could well grow considerably in the decades ahead, since there is more enthusiasm for that from the Philippines side than from almost any other country. Trade and investment prospects could improve enormously as the economy picks up momentum.

Vietnam, Cambodia, Laos and Burma

Some economic progress will almost certainly have occurred in all four of these countries over the next twenty years and more, but nowhere near enough to make them significant factors in the commercial life of Southeast Asia, or markets of more than marginal interest to Australian exporters, in comparison with the fast-expanding markets of the countries mentioned above.

Political progress towards either democratic institutions, meaningful human rights or even a more pluralist socio-political framework is sure to be slow, at best, apart from some progress towards a greater degree of participation at local government levels in Vietnam. Overall, the leverage exerted by these countries in the international politics of the region is unlikely to be very different from today.

The Overseas Chinese and Regional Integration

Predictions that the 25 million or so Overseas Chinese in Southeast Asia will play a leading part in spearheading the future economic integration of that region and southern China-often referred to as 'Greater China', meaning the entire Guangdong-Fujian-Hong Kong-Taiwan region-have been heard with increasing frequency since the latter area began to boom spectacularly around 1992, after Deng Xiao-peng gave his blessing to the market economy there. Since this coincided with a dramatic increase in the capital inflow into China from Hong Kong, Taiwan and various Southeast Asian countries, with a few wealthy Chinese capitalists from the latter attracting a lot of publicity, it was widely assumed that a new process of economic integration was already well under way, with the 'Overseas Chinese economies' of Southeast Asia being drawn into a kind of satellite status to China's huge, fast-growing economy. In some variants on this theme it was further suggested that some degree of political integration would in due course follow from closer economic integration, inevitably under the leadership of China.

If anything like that were to happen, we might expect that by the year 2020 these processes would be well under way. It is, however, highly unlikely, in my view. Any such development would cause extreme concern in the ASEAN countries-and especially Vietnam-for it would mean a reversal by China of the trend of the last thirty years when she has exerted strikingly little political or economic leverage in that region. If the local Southeast Asian Chinese were seen to be playing a prominent part in the process it would be taken as a sign that they were proving after all to be essentially the 'Dragon's Teeth' or 'Fifth Column' acting on China's behalf, as so often depicted during the early Cold War years. It would mean that China's long shadow was felt to be again looming over the region in a most threatening way, for by then China's economy would probably be the world's largest (although far from the most efficient, as productivity levels and per capita incomes will still be low), with southern China, where nearly all the Southeast Asian Chinese originally came from, in the vanguard of rapid growth and investment.

Fortunately, there is probably little danger that this sort of scenario will eventuate, even if China continues to boom and the wealthiest Chinese capitalists in Southeast Asia continue to invest there. Although we cannot entirely rule out the possibility that China's economic shadow over the region will grow much longer in the decades ahead-as it had been for centuries before about 1850, but has not been at all since 1950-there are several reasons for confidence that a mildly greater degree of economic integration will not give rise to political hegemony on China's part, not in the decades immediately ahead, at least.

It is a mistake to imagine that the shared Chinese racial origins of the Southeast Asian Chinese will mean (or does now) that their economic activities are geared to serving China's political or economic purposes. Most have been steadily becoming Sino-Thai or Sino-Indonesian or Singaporean for many decades and have few emotional or political ties to China, as they did in the early 1950s. They do not form a single 'Southeast Asian Chinese economy' bound together by their legendary transnational networks of guangxi (personal connections), trade and investment, important though these no doubt are. Their roots are essentially in the local Thai or Indonesian or other national economies and extend across national borders into other parts of Southeast Asia only marginally. To infer that all Southeast Asian Chinese form part of a single tight-knit network of racially-based relationships is seriously misleading. While a handful of super-rich (and very conspicuous) taipans in each country are engaged in networking with others and investing transnationally, some of them also in China, they are exceptional figures, not at all the bell-wethers of an entire tribe. Few others in the region can afford the high transaction costs of doing that. If a greater degree of economic integration is to occur in this part of the world-and it well may over the next twenty years-the initiative will come mainly from governments, for their own hard-headed economic and strategic or political reasons, not just because the wealthiest capitalists are leading the way. The latter have little political clout in any ASEAN country except Singapore, because of their minority status and unpopularity due to their wealth.

It is conceivable that over the next twenty or thirty years, some of the richest Southeast Asian Chinese will be inclined to look back towards China as a field of investment and trade, in contrast to their tendency to turn right away from her since the tumults of the 1950-60s. Hence the processes of desinification that have been going on for at least a generation may perhaps be slowed or reversed, although I think not to any great degree. They will remain essentially Southeast Asians in their political loyalties and economic interests. Blood is unlikely to prove thicker than water here.

Will High Growth Rates be Maintained?

Inevitably, the growth rates of more and more 'tiger economies' in East Asia will begin to slow down in the next quarter-century, simply because the recent extraordinary rates of 9-12 per cent per annum could not possibly be sustained as their economies mature. What happened in Japan after the 1970s was bound to occur eventually in Singapore, Taiwan, South Korea and others, as the 'easy' early stages of development were passed.

The 1997-8 collapse in GDP growth rates will probably not last more than a few years (about two or three, according to the most common estimates), although the momentum of very strong region-wide growth achieved in the early 1990s may not easily be built up again when the recovery gets under way. Yet the basic sources of rapid growth in the boom years are still there, three of which stand out.

First, the steady rise in efficiency and productivity per worker in all countries of the region since World War II has increased production levels enormously. There is no reason to think that will not continue for several decades further before the marginal productivity of capital begins to decline. Countries like Indonesia and Thailand still have a long way to go before the many pockets of structural inefficiency and low productivity are eliminated. Commodity markets were very poorly integrated a generation ago and there are still huge productivity gains to be made from better integrated markets. Such changes should yield big increases to GDP growth for many years to come, especially in China, India and the former communist countries of Asia.

It has been argued by Krugman and others that 'total factor productivity' (TFP) has not risen much in the East Asian 'tiger economies' and that their rapid growth has been due almost entirely to increased inputs of labour, capital and equipment rather than rising skills and efficiency (an argument based on early and dubious TFP calculations for Singapore), hence that their growth will soon slow down. But the statistical basis of his theory has been challenged by regional economists and the empirical evidence against it is substantial.

Second, the demand pull of buoyant export markets has been a major factor behind the boom conditions prevailing since 1970. It will almost certainly continue for many years yet. Even if Japan and the US become more protectionist and shut out imports from China, the NIEs and Southeast Asia, the pull of the huge China market will probably keep the economies of the rest of our region expanding for decades ahead. So also will self-sustaining growth within them as the poor become wealthier.

Third, rapid urbanisation will stimulate investment and demand as a couple of dozen megacities become established in East Asia (ten of them in China) which will act as what Rohwer calls 'cultural, financial and industrial cores of vast hinterlands'. At the same time, 'the gradual but relentless lifting of two billion rural Asians out of poverty' will contribute to that process, while also creating a more efficient, capital-intensive farm economy.

On the other side of the ledger, it should be noted that even in optimal circumstances the future growth rates of these countries are likely to be lower than previously, due to the high costs of infrastructure investments required in the immediate future, environmental damage and constraints, as well as diseases like AIDS. The impacts of these will fall unevenly on different countries and cannot be quantified at this stage. Rohwer predicts that growth rates in China in the twenty years after 2000 will average only half those of the previous twenty years-but they will still be double the growth rates of advanced Western countries. Asian countries will in that time absorb about half the total increase in production of all goods and services, apart from those of the most advanced industrialised countries, such as the USA and Japan.

Democratising Versus Authoritarian Tendencies

Despite predictions that economic growth will lead to a larger middle class and thereby to pressures for democratisation, I doubt that much progress towards a greater degree of liberal democracy as we in Australia know it will be achieved in the next generation in many Asian countries. But major swings towards more authoritarian regimes are also unlikely in the next twenty years because of the widespread pressure for greater openness in government, wider participation, greater transparency and accountability in government agencies. We will see no great swing towards 'liberal' democracy with opposition parties accepted as 'loyal opposition' but diverse variants on the theme of 'Asian democracy' and 'Asian values' which are regarded there as no less valid than 'Western values'.

In Malaysia, Singapore, Indonesia and the Indochina states it is highly unlikely that major changes from the status quo will occur, since other factors, essentially local, enter into the equation in each case. In Indonesia, a swing towards a regime that is more authoritarian rather than less is easily imaginable, although my guess is that at most only a minor shift in that direction is likely. But equally, little more than a minor shift away from the present authoritarian regime towards greater democracy is on the cards. The political institutions currently in place have gained a high degree of acceptance, although the manner in which they have been used recently has aroused widespread criticism.

In Thailand and the Philippines, there is not much need or scope for further reform of either country's representative institutions, although there is a widespread wish to make them work more fairly in the interests of the poor as well as the rich. If those wishes are frustrated a backlash towards 'strong-man rule' is imaginable, although I think unlikely. There is much dissatisfaction with the political parties in Thailand and continued fear of military intervention into politics as in the past, hence a demand for new constitutional arrangements. But any changes are likely to be of a minor nature. Likewise in the Philippines where the perception that formally democratic institutions are working only in the interests of the rich could give rise to pressures for change, but not on a dramatic scale.

In Vietnam, Cambodia and Laos, some progress towards more open and responsive regimes can be expected, although probably still within the current framework of Leninist one-party states (apart from Cambodia). But it would be too much to expect significantly more rapid changes in the next twenty five years than the last, I suspect, even if rapid growth rates start to generate a stronger middle class.

Myanmar is more unpredictable because of the personal role and status of Aung San Suu Kyi. If a miracle occurs and she prevails over the SLORC (the 'State Law and Order Restoration Council', that is, the military government of Myanmar), we may see another attempt at a genuinely responsive, even 'democratic' regime, but the odds are heavily against it.

Brunei will still be a sultanate, enormously wealthy from oil income and accumulated financial reserves, directly controlled by the Sultan, with few or no democratic elements.

Implications for Australia

Australia's relative economic strength, comparative advantage in various traditional fields of production and significant political clout in our dealings with East and Southeast Asian countries is likely to decline markedly during the decades ahead of us. By 2020 it will have become much harder than it has been in the past for us to exploit the advantages we have previously enjoyed in the form of advanced military technology, industrial skills, sought-after commodities, high educational standards and a special treaty relationship with the USA, all of which once put us in a strong bargaining position with many of our neighbours. That will no longer be the case with Japan (where it has not been since the 1960s), Taiwan, South Korea, Singapore and probably Malaysia. As a source of foreign aid, capital, military training or equipment, educational services and (less certainly) professional skills, Australia will have no special edge over many other potential suppliers. If we aspire to gain acceptance as a fully accepted member of the East Asian comity of nations (apart from APEC, assuming it still survives), we will have to pursue a very skilful set of economic and political strategies that maximise our comparative advantage, both political and economic. That will not come easily-or cheaply.

To a degree that has never previously been the case, we will find ourselves forced to approach some of these countries almost as supplicants in certain political matters (not all of them, and not in all things, although in many) because they will hold the political trump cards-most particularly the power to blackball Australia from full membership of their regional clubs, be they ASEM or EAEC (if it transpires) or ARF, or other as yet non-existent bodies. We cannot afford to find ourselves blackballed, but it will not matter much to any of them whether we are or are not. Japan may make some efforts to ensure that it does not happen, for her own special reasons, but not at too high a political cost. We may be able to minimise some of the inevitable loss of our bargaining power by developing very skilled, well-informed and far-sighted diplomatic capabilities, if we focus seriously on developing them, but only up to a point.

Exclusion from the political and strategic deliberations which will help to shape the regional international order and the terms on which a stable balance of power can be maintained would be the worst-case scenario for Australia by 2020 (or before then). Conversely, if we are admitted and hence able to participate on equal terms with the other countries of the region, we can hope to make continued use of our 'soft' assets in the form of brain power, access to top-class information sources, libraries, regional expertise and a well structured higher education system, high-quality legal and accounting systems and so on. Few of our neighbours are likely to have caught up with us by then in these fields, but they are already closing the gap. It would be prudent for us to adjust our rhetoric to this reality and ensure that our politicians, officials, military officers, press and media personnel and businessmen abandon the boastful cliches of the past about how Australia should 'take the lead' in Southeast Asia, or serve as 'a bridge between Asia and the West'. (They can build their own bridges-or buy them, if they must-and take the lead in their own fashion, without asking us.) Low-key rhetoric about partnership and mutual benefits from commercial and cultural interchange will serve us a great deal better.

The shape or character of the lineaments of the regional international order and the emerging balance of power (provided hegemonic outcomes can be avoided, which seems likely at least until 2020) will matter to Australia as much as to any of our neighbours, despite our greater distance from potential trouble spots, primarily because if their security is threatened, so is ours. We cannot simply take refuge in 'splendid isolation', either strategically or psychologically, as some Australians seem to think (or hope) is still possible. But unless our views of how the balance of power should be maintained are intellectually, politically and strategically consonant with the views of our neighbours (including their and our views of the role of the USA, as well as of China and Japan), we will find ourselves excluded from the search for consensus. We do not carry enough fire-power, mental or physical, to force our way in. And we will get little help from the USA in such circumstances, either diplomatic or military, since our utility to her depends crucially on our being a member of the club.

Nearly all East and Southeast Asian countries are eager to avoid the necessity to make invidious choices between the Chinese and the Japanese in the course of everyday diplomatic intercourse. No one, except perhaps Taiwan, wants to be herded into one camp or the other. They all want to keep their options open. Australia is in much the same boat-although I suspect that in the last resort we may in the future have stronger motivations to align ourselves with Japan than with China, when the chips are down, a matter on which we may find ourselves at odds with various of our neighbours. But that is highly unpredictable territory.

Our relationship with Indonesia is likely to be vastly more important, multi-stranded and complex by 2020 than it is now, in terms of its economic significance, the range of institutional linkages (roughly comparable by then with those we had with Japan a decade ago?) and in simple proximity as measured in flying time and the density of the telecommunications web between us. The sheer come-and-go of tourists, students, businessmen and media-entertainment personnel is likely to be immensely greater than anything we have seen hitherto. The same may be true of other Southeast Asian countries also, but to a much lesser extent, I suspect.

Central to all this will be the character of Australian responses to the changes occurring in the Asia-Pacific region between now and 2020 and the quality of our visions of how we will find an appropriate place in the future development of both particular countries and the region as a whole. If our national leaders can articulate a credible and inspiring vision of our role there, and are backed up effectively by business corporations, the media and our educational institutions in their drive to sell educational services in Asian countries, we should be able to adapt successfully to the changes occurring there at such a dramatic pace. If they fail to do so, we may have to abandon optimistic scenarios and focus instead on the least desirable ones. The challenges-and opportunities-we face in that respect are more likely to be mental and psychological ones than matters of military conquest or economic subordination, as in the past.

Conclusion

To summarise, both Singapore and Japan will almost certainly have attained substantially higher per capita incomes than Australia by 2020, and have reached higher levels of technological sophistication in many fields, while Taiwan and South Korea will be close on our heels. Malaysia and Thailand will be catching up fast, but still some distance behind us, while Indonesia, the Philippines and China will be a long way behind them, even though their growth rates could still be quite high. Political conditions are unlikely to be more than marginally different in any of these countries (except perhaps Burma and Vietnam, although even that currently seems unlikely) unless unexpected socio-economic upheavals occur. The international stability of the region could conceivably be upset by an over-assertive China or a messy crisis in Korea or the Taiwan Straits, but the probabilities of either seem more likely to be relatively low rather than high.

Australia's capacity to influence developments in the region will become considerably lower over the next quarter-century than it has been over the last. If we can deploy our 'soft assets' of brain-power, technological sophistication, high-quality educational institutions and information pools with skill, vision and knowledge of the region, so as to maximise our participation in regional organisations, we may be able to offset that decline. If we do not, we run the risk of progressive exclusion from the councils of the region, the worst-case scenario that could befall us.

A Postscript, January 1998

This paper was written before Southeast Asia experienced the full impact of the currency crises of August-September 1997 triggered initially by the collapse of Thailand's property and financial markets. It has since become clear that growth rates in Thailand, Indonesia, South Korea and Malaysia are likely to fall sharply over the next year or so and that the boom conditions and high growth rates of 1986-96 have ended.

The paper was originally written on the assumption that something like the very high growth rates of the early 1990s would probably continue, although at slightly reduced levels in due course. Rather than make substantial amendments to take account of the effects of the current crisis, it has been decided simply to add a brief postscript on their likely medium-term consequences.

The main points to be made on the matter are as follows:

  • Economists familiar with the region are generally agreed that it could take two or even three years for these countries to recover from the crisis of bad debts and bankruptcies resulting from the boom conditions prevailing earlier. However their basic economic structures are still strong and there are no insuperable reasons why the countries of Southeast and East Asia should not be able to resume the long-term growth trajectories implied in Table 1. If there are major problems ahead, they are more likely to arise from the political fallout from the crisis than the economic.
  • More effective regulatory mechanisms in the financial sector will certainly have to be put in place to guard against the sort of excessive borrowings on the basis of wildly inflated property values that have marked the boom years. Whenever economists have remarked that 'the fundamentals are still sound' in these countries, they have essentially been referring to the production side of the economy and the export trade situation, overlooking the less obvious weaknesses of control over the banking sector. The crisis may be expected to precipitate overdue action to tighten controls over the financial system by central banks and finance ministries, although political and administrative obstacles to that may still be hard to overcome.
  • While the immediate costs of the crisis are bound to be painful to ordinary people, there will be some beneficial aspects for the overall health of the economies of the nations involved, in that currency fluctuations will increase exports and exporters' incomes in Southeast and East Asia, giving also a considerable boost to government budgets on the revenue side.
  • It should not be difficult for the countries caught up in the crisis to recover to a long-term growth trajectory that will yield GDP growth rates averaging around 5-6 per cent over next 20 years or so, judging by the economic progress and political stability established over the last twenty years or more. There will even be some advantages in lower growth rates if the countries concerned can avoid the overheating and excessive asset inflation caused by very high growth rates in recent years.

Appendix A: The Last 23 Years - Unpredictable Changes

When we look back at the kinds of changes that have occurred in our region over the last 23 years, it is noteworthy that many of the most striking of them would have been quite unpredictable in 1974.

  • In 1974, the end of the Vietnam war was not yet imminent. The possibility of a communist takeover in Indochina was still regarded as a major threat to the stability of the ASEAN region. (Yet later developments have proved otherwise.) China was still utterly unreconstructed under Mao and, later, the 'Gang of Four'. No one could have anticipated the collapse of the USSR and the entire communist bloc. Suharto's grip on Indonesia still looked far from secure. Thailand was in political turmoil, Marcos was looting the then wealthy Philippines into poverty. The rapid economic growth since seen across Southeast Asia would have been thought an idealist's fantasy. Australians even worried about the rise of communism in the Philippines and Thailand, as well as in all of Indochina. PNG was not yet independent and the East Timor problem was just looming as a small cloud on the horizon.
  • A few swift turns of fortune here and there have transformed all those situations, making possible the astonishingly rapid growth of the last decade and bringing vastly greater wealth and political stability to almost all parts of the region, except Myanmar, Cambodia, East Timor and PNG, as well as political stability. Population growth then seemed to be an unchecked (and uncheckable) threat throughout most of the region, whereas today the prospect of ZPG (zero population growth) is clearly in sight in most of Southeast Asia, due to the 'demographic transition' associated with modernisation, education for women, and later marriages.
  • The East and Southeast Asian international order was then dominated by the two superpowers (with China, still emerging from the turmoil of the Cultural Revolution, not yet a significant player, Japan an uncertain one) and the regional countries hardly signified at all. ASEAN was a doubtful quantity, seeming to lack both political cohesion and economic muscle. In 1975 some observers were even speculating about a coming struggle between Vietnam and Indonesia for hegemony over Southeast Asia. Intervention by the Great Powers in the politics of the region was still a major worry in the region, as it had been over the previous twenty years. Today, conversely, it is concern about a further withdrawal by the USA that causes worry in many parts of Southeast Asia, and Japan, rather than its presence.

And yet, despite these huge changes, significant continuities in the politics and societies of the region remain influential. Many will persist well into the next twenty three years also, far too many to list here.

Appendix B: Natural Disaster Scenarios

I am assuming here that Southeast and East Asia will not affected too seriously by between now and 2020 by major wars, socio-economic catastrophes or massive natural disasters, such as droughts or typhoons, widespread famines, major climate changes, forest fires or extraordinary epidemics (apart from AIDS whose current and future magnitude is roughly assessable in some countries). That assumption implies a high degree of optimism, as the 1997 forest fires and droughts due to the El Nino phenomenon have revealed vividly, but the probability of such disasters is so hard to calculate that they could be factored into my prognosis only on a guesswork basis, with too many lengthy qualifications to be practical.

Natural disasters such as major earthquakes along the Rim of Fire, or huge volcanic eruptions, can by no means be ruled out of consideration. It is worth reminding ourselves of the little-known historical fact that eruptions of the magnitude of Krakatau in 1883 are estimated to have occurred somewhere or another in the Indonesian archipelago about once every hundred years, so another is already overdue statistically (Simkin and Fiske, 1983). The eruption of Tambora, an island off Sumbawa, in 1815 was estimated to be even greater than Krakatau, throwing volcanic dust into the atmosphere in such huge quantities that that crops were ruined as far away as Europe over the next two years.

What impact such a disaster, or any of the others listed above, would have on the agriculture and ecologies of surrounding countries, including Australia, is hard to imagine. What strains it would put on the stability of the international political and economic systems cannot be foreseen with any precision. What demands or requests would be made for emergency help, humanitarian aid and economic rehabilitation of a wealthy country like Australia-and how Australians of that time will respond-are even more problematic.

One would like to think we would react generously, but can we be confident about that?

References

Chen, Edward K.Y., 1997. 'The Total Factor Productivity Debate', Asia-Pacific Economic Literature, 11(1), pp. 18-38.

Crouch, Harold, 1996. Government and Society in Malaysia. Cornell University Press, Ithaca.

Krugman, Paul, 1994. 'The Myth of Asia's Miracle', Foreign Affairs, 73(6), pp. 62-78.

Rohwer, Jim, 1995. Asia Rising. Simon and Schuster, New York.

Simkin, Tom and Fiske, Richard S., 1983. Krakatau 1983. The Volcanic Eruption and its Effects. Smithsonian Institution Press, Washington.

Back to top